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tv   Whatd You Miss  Bloomberg  December 9, 2016 3:30pm-5:01pm EST

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that there is a four-month extension, it is the best and that they will get. some democrats are pushing for a one-year extension. obama is using his executive power to add protection to the other cost. the what how says that the creation of a northern bering sea climate resilience area are protected for marines resources, it will cover more than 12,000 square miles. balloont of a hot air crashed in texas killing himself and 15 others. cocktail of drugs before liftoff. that is according to documents. it is said that alfred skip nichols was under drugs. he had been convicted five times for driving while intoxicated.
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aleppo -- the yuen says that it is concerned about reports that hundreds have gone missing after entering government controlled areas of the city. it is estimated that about a hundred thousand civilians are trapped in those areas. a new report into systemic russian doping is detailing a wide-ranging institutional conspiracy involving more than a thousand athletes and more than 30 sports. the findings from the world anti-doping agency was at the 2014 winter olympics. statementsdenied any about the doping system. global news, 24 hours a day, powered by over 100 26,000 journalists and whether 120 countries. this is bloomberg. ♪
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bloomberg's world headquarters, i am scarlet. we are 30 minutes from the close of trading here in the u.s.. this question is what did you miss? >> talk about bad timing, these chairs under pressure today after they say they won't grant raise capital. i'll is happening after italian authorities are to form a new government. the topen is said to be candidate for the president-elect's economic policy adviser. we'll talk about his fear of influence and what it as to the top administration. and ather wall street executive is weighing in on the incoming president. more moynihan says that balance about the banking industry will be a step forward. that inhlights from this hour. >> abigail doolittle is standing
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by. have stocks changing right into the close. we have the three major averages, the dow, all at session highs. they are on pace for record close an all-time record highs. huge strength for stock. a daily't just show on basis but it also shows on the week. look at these gains for the dow acp 500. they are on pace for the best week since the election week. going for its fifth weekly game -- gain. stockswhat is helping higher on the week, we are looking at technology and also the banks. we have apple and microsoft creating higher on the week. apple is on pace for his best week since september 15. getting a bit of a boost.
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they felt better than expected quarters. the banks are getting a boost. investors believe that this will help the banks make more money. their lending activities and the financials i want of the best performing sectors out of the election, up about 18%. take a look at the momentum. we will again g #btv. us the number of stocks trading at 52 week highs on the night here. tradinghat that is quite high, at the highest level since 2013. telling us that there is good breath for this rally, lots of participation. perhaps this is a reason to believe that these record highs will continue on joe and scarlet. let: what would a botched rescue me for the country was bigger and healthier banks? what they did was reject
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funds on monday. that doesn't necessarily mean that we will see a boston rescue does it? >> we still do know the terms of any rescue that would be done by the state. there is an attempt to raise 5 billion euros privately. vacuum, as potential lot of instability. they will let any wartime past before the bank has to raise that money. that makes deadline a lot harder . it means that private investors don't turn up. the state might be less necessary. i could bring risk to the whole system. joe: what was the current deadline? what were they asking for? what something have changed in that time. that would make a rescue more feasible? >> that is a good question. it was a was going to look risky. i don't want to blame the referendum.
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was a regulatory deadline imposed by the european central bank. the bank wanted more time apparently and it doesn't seem like it is going to get that. let's not blame the referendum. this will always be risky, it just looks riskier. joe: the chart is down 5%. there is basically no market cap. you say that those private investors by charger, who michael's private investors >> it was like in that big cornerstone investor. bring a private investors. remember that we have had other issues here. very complicated, we are looking for some goodness before the year's and. it looks like we probably won't get it. what would happen at the end of the year if there
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were no good news? looking for some pain for bondholders and the italian households. i the bonds of the bank, it doesn't have to be a winds down. -- winddown. what that means the confidence in the bigger banks like that need toes invest the confidence and deposit the confidence? makes italian banks different from the rest of europe's banks? are not the first european bank to face problems with capital. italian banks have a much harder time getting through the first step of a rescue. >> no european country has the same banking problem across europe. we know that spain had a realist -- real estate bubble. it really is a combination of weak economic growth, little action on reform and spending to
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the real economy is what they did. there was fraud, there was mismanagement, ultimately no one has tried to draw a line on this problem over the years. i think that it is important that we try to fix this soon because that could maybe help the rest of the system. in risks spiraling out of control. >> who did they make most of? two businesses question mark to consumers that cannot pay it back? >> yes, there are some sme loans that have been kicking around for some time. is about taking those losses. let's be real of the balance sheet. it hasn't happened yet in italy and europe. joe: one of the things you mentioned that people know about italian bases are that a lot of the barmy tellers are owners. people who went into a bank and may have thought that because they were buying something from the bank that it was a de facto deposit or something, how much could theyt
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theoretically be taking? it is about 2 billion euros. that seems small. on the other hand, it is about the political affect. we have had their lengths before. we have to see. some say it is an idea worth testing. maybe the political fallout will be that bad. again, we don't know. retail owners of italian bonds have anyone negotiating on their behalf? >> we don't know the terms of what this would look like. there is talk of some kind of compensation. you would have some burden sharing. the government would i knew it to compensate for the bondholders. that is to possible. scarlet: you had mentioned unicredit. with the ucb be more magnanimous when it comes to credit deadlines?
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governmentt is a big institution. it has the power of self-help here. capital onally raise its own terms, privately. so that is a different story. i did wonder what would happen. what would happen if there was a real hit to the companies of all the italian banks. they have been: to pay for the loss of the smaller banks. scarlet: he covers european banks, we will be checking in with him in the coming weeks on italian banks. americans are feeling rather optimistic about their financial situation. we will have three charts that break it down. this is bloomberg. ♪
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♪ joe: the zero cap as has jumped this month. if you talk about what is behind the optimism is matt boso. you have dived into the report nuggets.e interesting what is pushing company is ggets.? -- confidence higher? what is pushing company is had very good confidence numbers from the university of michigan. also, we are seeing a bit of a turn in the economic data lately area that could be kind of boosting sentiment as well. a mapi all about the election. in general, thanks seem to be getting -- thing seemed to be getting a little better. if you look at the particular measures and the survey, people there areing that people in the survey are
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reporting that they have improved financial situations versus a year ago. the most in 10 years. generally, people are feeling very optimistic. they are reporting that things are looking good right now. >> have a chart with your of how people see their retirement. what is going on there? >> that is part of that people feeling better about their financial situation. look at the percentage of people, the white line here shows the percentage of people say that they are less likely than they were five is ago to have a comfortable retirement. the blue line is the unemployment rate. you can see what this white lie looks like. the unemployment rate like that. when it is high, people are less likely to say they will have a comfortable retirement. that drops a lot in december as the chart shows. it is now down to the lowest level since january, 2008. that is a great time. it is not just about what is happening now, what you expect over the next year. long-term, people are feeling
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better about their long-term prospects. >> another thing that is in their business conditions, a really big spike in the percentage of people who think that the conditions for business will be better than a year from now. >> the thing i really like about this chart is the surges in recession. or just coming out of a recession. normally, when you're going into a recession, let's must be with a business conditions will be good in the year ahead. when you get into a recession or coming out of it, it is like you're at the bottom, things get worse. people think is going to be better next year. this really underscores how we really did have a downturn in this economy that was real. it didn't show up as a technical thoseion, we didn't have two quarters of contracting gdp but there were a lot of science in the business sector for example that people -- things were happening that don't normally happen outside of a recession. i think his underscores the point well. >> there are some points here bring that you wanted to
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up. it has to do with the surprise election about from. i love these close because people don't -- people going into the election saw that the stock market would've had negative from donald trump. this, it saysf that media pundits said this was totally wrong. it says that the surge was largely due to consumers trump's victory. more consumers spontaneously mentioned the expectation of positive impact on her finances. they said that they were so excited about the election result. >> there is a question, i think pointed out that they asked specifically in the survey about how you feel about the government is doing about economic policy. that should be good. they should be" right afterwards that i like even
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more. there was this to search and confidence, there were a few expectations to early december search and optimism. namely among those with a college degree and residents of the northeast. although no group has adopted that. the only people who are not totally feeling better are people like new york city finance and media and the college degree people. they never really got into trunk area >> -- trump. >> these are the preliminary results of the survey. >> i can't wait to see what this will look like. a coastal lease, california, new york, massachusetts, washington dc, that whole quarter are feeling less optimistic. in particular, they will be much higher. this is really interesting because of this last chart you had. we see a lot more people talking about inflation.
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the markets and be pricey more on inflation. and yet, concerns about inflation absolutely collapsed. >> there is this question in the service that i like. it is one of my favorite questions in the survey. this is the white line. the question is what percentage of people in the survey you like there personal finances are worse than they were a year ago due to higher inflation. you can see that in 2008 for example, this is a search because we had high inflation and people were getting laid off. they had bad personal finances. can see that usually, these two track each other over time. they both go up and down together. interestingly, what we had over the last two years was inflation going up. we had fewer amounts of people saying that there were -- they were soft because of higher prices. unemployment was swamping the increase in prices, the effect that is having on personal finances. joe: two things, when i look at
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this chart. the economy was going down the toilet by that point, gas prices were still really high that summer, there was a lot in the news. that might explain it. also, do you think that to some extent, this question is a proxy for how things are? you hear the question about rising prices. usb questions, what you really here is another version of are you doing ok? people are feeling better, they say inflation is less of a problem. ask are your personal finances a worse than a year ago? the second question is why. that is what we are seeing in this chart. i think this also really serves to illustrate well the fact that inflation expectations in the survey were still low this month. they tend to almost be like negatively correlated sentiment. when sentiment is high or when expectations are low, it is high. i think this gets passed why
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that is because sometimes, when you have high inflation, that comes at the end of the business cycle or when things are turning down, there is a reason that correlation is there. i inflation usually coincides with lower sentiment. scarlet: do michigan members usually precede data or they follow data? they are good indicators. maybe neither. would you look at the first chart, they tend to track very well. they do tend to lead by maybe two or three months. maybe a leading indicator, or vehicle incidental indicator. it is good to pay attention to them because these are some of the first date is that we have on the data calendar each month. >> thank you so much. scarlet: let's look at some of
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the biggest business stories in the news right now. on a upon crackdown trackable revenue is coming. in an unusual move, they also allow the rate of refusal for lower quality gems. about 90% of the world's $40 billion of diamonds are cut in polished -- cut and polished in india. general electric is boosting its quarterly dividends for the first time in two years. they are continuing their crawl back from the recession. this is payable to shareholders on january 25. the ceo says that ge plans to increase with earnings. they are considering the rules within transparency. we're talking book your deep your lending and investing platforms. they enjoyed surging growth in the u.k..
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this is a record $1.26 billion in the fourth quarter. after a five-month review, they found them lacking on transparency. the chinese makers of popular selfie touch of apps could raise as much as 26 point $9 million after pricing is offering at the low end of its marketing range. that is according to people with knowledge of the matter. it is the first big-time sale by a tech company in hong kong. that is your business flash update. joe: up next, coca-cola has been open about its ceo's recession plan. he announced that he will be stepping down. what happens next is unclear. this is bloomberg. ♪
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i'm scarlet. coca-cola will be heading. over. he is interesting the job to a masterly company toward less sugary beverages. james quincy will succeed him. he will stay on as chairman. what this chart does is show the relative performance of coca-cola under kent. your coca-cola versus pepsi. this is a ratio. goes up, coca-cola is outperforming pepsi. when goes down, it is underperforming pepsi. pray much since cats began, it has been a flat lie. is dr pepper and saddle. coca-cola has really trailed behind dr pepper and snapple.
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they have gained over 470% since kent was ceo. a was doingot get so well. speaking of stocks doing well, we are seeing one of the broadest rallies in the history of the market. nyc listedhart of stocks. one of the ones that are at any given time making a new 52-week high. you can see that bar at the end absolutely surging. it is at its highest level since 2013. first, this recent rally was a little narrow, financial energy, it really has gathered steam. and of different sectors they are now participating in the game, new highs everywhere you look in this market. for people who like to see brett from the rallies, does this tell you anything about the future? i guess when the
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president-elect promises tax cuts, everyone benefits. >> everyone across the board. >> the market close is next area take a look at our major averages less than four minutes to go before the close. a record high for the dow of over 132 points. this is bloomberg. ♪
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we are moments away from the closing bell. donald trump has one of the broadest rallies in history. health care companies are joining the postelection rally. this is the first decline of the week. you can see live at the nasdaq, sees her bringing the closing bell. i am scarlet blue. vu.carlet joe: you can watch our closing coverage on twitter. we begin with our market minute. all the indexes turned higher by the close. the dow is a new record high. this will be the 14th record close since the election. it doesn't even seem to matter anymore.
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every day, there is a new high. if you look at the sector breakdown, as i have been doing are on my bloomberg, it is pretty broad advance. you have 11 sectors in total. i know that the 11 sectors posting on the day. consumer staples became the winner at the end of the day. we will looking at health care. they missed the postelection rally. they were chased a little. only .1%. here are of have marked only the fourth time in 22 trading days. now it only turns out that they have: only three times. >> that is an incredible stat. let's look at government bond. >> i want to division up with the weekly stuff here. we are still excited about his record highs. sinceggest weekly gain the election, you can see they are up 6/10 of 1%.
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i included that there. it did finish higher on the day and higher on the week but that was the key break down there. some people had been excited about the idea that small caps would be doing better than big caps. they are less tied to the strong u.s. dollar. a very quick mention of 21st century fox down 1.5%. we mention this because the company reached a poor elementary deal. buts not a done deal per se this is something that rupert murdoch has been eyeing since 2010. >> knows look at government bonds. there was a higher yield on the 2.10% those the highest level since the election. i want to put more perspective on that. let's look at the intraday move. had jotted that it
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down lower. there was a little bit of a flight to safety. you can keep treasure yields down these days. it did not last very long. you can see that it shot up there. let's take a one month look at the same chart for a little bit about postelection contact. you can see we were at the same levels that we were at a week and a half ago. can overlay be back stocks and is pretty much the same. and currencies, the dollar bounced back. a close out its third day of gains. it broke through 1.15 for the first time since february. the euro is back at a 20 month low. . quick check on the turkish it was due for a rally. that is what we got at the start of the week. the dollar was losing value first the turkish.
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there was disappointment over the government's latest economic measures. jpmorgan says for instance that another 100 or 150 days points are needed to stop this negative the back loop. and a quick look at oil gold today. gold is continuing to slip. not doing very well. oil is putting together -- over 51. above 1.3% today. scarlet: those our intermarket minutes. this is russ. russ, you brought us some charts. let's get to it. you can find the charts using the punch and the bottom of the screen. let's get to this first one. it is valuation. is in yellow.dex this would make it appear.
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it is normal us -- normalized? how fully valued are we at this point? russ: we are fully valued. people are pay more for a dollar of earnings. the other milestone that happened this week which and i get mentioned as much is nasdaq trading. levelst time we saw that was in the trailing days of 2009. of course, then, earnings were depressed by the recession. today, we are at the earnings. we are close to the margins. we are still trending at this very lofty evaluation. i think the takeaway, the thing about 2017, it will be harder for the case to continue to be driven by multiple expansion. next year, earnings are going to have to kick and it is rally is gog to continue. that is auch of function of a corporate tax cut?
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you look at the estimates for 2017, they were aggressive before we knew about the trump victory. they look more realistic in the context of a corporate tax cut that adds five or six dollars. they get the point where you stress to hit that number unless we see it faster. scarlet: will the effect of a stronger dollar come into play? view was that the dollar is moving down. we will move that headwind. now we have seen this massive dollar rally in the last month does create a headwind to some extent. it may offset some of the benefits that we get a potential tax cuts. >> i want to go to another chart you brought in. it is the u.s. inflation outlook as the market season. measure by 10 year break evens and that is picking up to 2%.
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we have it on the wall. are we there? 2%? magic number? is inflation happening this time ? it is aple were saying big move off the bottom, a big move off the summer. we are still fairly low. the interesting thing compared to the summer of 2014, core inflation, which is the stickier part of inflation is actually double. expectations are below where they were back in the summer of -- 's we do believe economy will be inflating. we believe we will get stimulus. bond deals have further to rise. if you were -- if you had a
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portfolio of u.s. equities, you'd be doing great. if you have a portfolio like most people have which is diversified. maybe some are merging. you haven't been doing that losses the election. some popular portfolios are probably down since the election. meanwhile, every day, we are saying highs. people are looking at their portfolios. in how manyuge gap people are doing versus these headlines. russ: i think you have nailed it. most equities have go to sleep. it is fantastic. be most people, that will way too much risk. i don't think i've is a vacation is dead. spoke about the evaluation of the u.s. equity markets. they are the ones that are cheaper. japan has been doing very well. as much of a fun ride if you are dollar base. particularly for investors that are looking for longer-term value placed, that is a market i would think about sticking with.
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scarlet: it is about entry point to get in? russ: if you look at it year-over-year, the move is much different, it is not a dramatic move. unlike the u.s., where a lot of the games last seven years, japanese stocks are reasonably priced. joe: what about the fixed income of this? people wonder if this is the end of a great market. getting that rising like a big? . >> i think is the big question. what i would say this time is that there -- if we do get genuine fiscal stimulus, that is going to do a couple of things. you will see some acceleration in growth. maybe not that to where we work crisis that bess and then we were in this 2% range. if we do start to get that handoff from monetary stimulus to discuss stimulus, we may get a more aggressive set.
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it will bring your bond allocation down. you are going to stick with us. we are going to talk more about your latest notes. and when we can expect this all to bezel. this is bloomberg. ♪
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♪ i am corny collins. collins.ey gerry cohen is the top pick for cheap economic policy adviser. that will push the team network pass -- the team's combined net $2.5 billion.
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this woman is slated to leave the small business administration. house speaker paul ryan was in new york today to meet donald trump. if they are after this it down a trump towers. timeryan: i had a great meeting with our president-elect. we talked about our transition. we want to hit the ground running in 2017. thanks guys. >> trump in louisiana. he is headed to grand rapids, michigan. gatlinburg tennessee has reopened to the public after wildfires killed 14 people. charged to juveniles with starting fires that later spread. the city is fighting a rat infestation. the rodents easily outnumbered
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parisians. their ranks are growing. according to one estimate, there are about 6 million as in the city. that is 2.5 per person. parts are close and trash bins are being redesigned to keep that's out. i am corny collins, this is bloomberg. scarlet? even if this condor is changing. small caps on surging. take a look at this chart here on bloomberg. this is russell 2000. -- have brought their as much as 9.3%, that is the most since the year 2000. if you look ahead to what happens, this is what happened in 2000, you have this big underperformance in small caps relative to big caps. you wonder if this is what is in
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store for us this time around. when you look at this chart, are we spending -- setting ourselves up for this underperformance? ask this is a risk. people are buying more vulnerable once since that small bell. people are worried about a strong dollar. they know that hurts large caps more than two all caps. why the dollar is going up. but of that reason is because interest rates are rising. they can be a bigger headwind for small gas. that tends to hurt their evaluation. people want to be very careful about the small cap trade. rates are interest challenging for small caps in particular. >> they present a tightening market -- market fight -- condition.
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they are compressing the multiples on the companies. some are more dependent about financing. it also dampens the appetite. when i started to bite, it has been worse for many of the small companies than the larger names and make a caps. let's i think december 9, the year is coming close to an end. as a talked about a lot of people with investment portfolios. they have not been doing a great. how much of what we are seeing is chasing? people want to go into the end of the year. happened today. we had another great day for the market. you have a lot of momentum in place. part of what is driving that is that we have now many years of people selling stocks and buying bonds. that was a great trade. argument, that trayvon in july, it didn't leave a lot of people with individuals. managers,ns, asset
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this rally is gaining steam. you see a lot of people shift their allocation. >> they are realigning, shipping, they are making this transition. they are getting to keep away. how much cash is still left in the sidelines? other putting new the money to work in equities? are they taking out a bond? >> i think it is a really important point. there is a lot of cash on the sidelines. some of that cash is filling a different purpose. for a lot of the last five or six years, you have a welded portfolio, you have bonds there, they did a couple things. the deputy volatility. one of the ways they did that was being negatively bad. the market crashed, bonds went up. and an environment where the beer trusteeship a little bit, we are no longer's geared -- no longer scared about a recession. if that happens, then cash is
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arguably the better page than a portfolio. an eczematous allocation will reflect the change the way those assets are moving together. joe: you mentioned that bonds has been selling offices the middle of the summer. is this a big change or is this another many rotation within a much bigger trend? we have some people say that this was it. we had the bundle markets and now we have the regime change and we have discussed this -- different fiscal stance. as the turnaround. and you see that? >> i think there is a difference between saying that the bull market and bonds is over. i think that there is an -- edible market that the it can mean that we have a long. where bonds are in the trading range. one thing that this plays into
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is that we will see summary acceleration in inflation. it is worth pointing out that when inflation has been low, we can look at medical costs. they have been rising. it doesn't mean we are going back to the 70's, it means that the type of deflation that people are discounted, it may be higher than people thought. scarlet: i was looking at the trade. our bottom and july, that was certainly the case. like and what happened in 2013, during the paper tantrum, talk about the pain that resulted from that backup and deal. that seven and -- that solid backup and yield. i think that this time, it is not just a function of rates rising because people were not about the fed, is also rising inflation expectations. in terms of the pain it is
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causing, where you are feeling of the most in where you will continue to build the most, that is in the parts of the market where people were fleeing the -- buyingt and find low volatility stocks. utility companies, these are where the bond market refugees, they have been playing. pushing evaluation of. pushing dividends and yields down. as a result, those stocks really need to stay look to justify that valuation. 275, some inng to the tenure. i think some of those segments of the market are too expensive and there is probably more to come. >> wanted to have something to head apparent safety and coupon of a bond. those got really hot because people thought they were getting a little bit back. >> people pay for that perception of safety. what they are guarding against
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is the next recession. but what you're really guarding against is a bond market meltdown. it may not be as safe as people thought. scarlet: we're going to discuss whether or not there is still deflation pressures coming out of china. in terms of breaking news, some new headlines, trump is announcing that rudy giuliani has pulled out of the search for secretary of state. we don't know who it will be but it we know -- what we know that it will not be rudolph giuliani. have a lot of names in the mix, mitt romney, david trias, john bolton, bob corker. she even mentioned alan mulally. the former ceo of ford motor. we will be back, this is bloomberg. ♪
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♪ china may a lot of be exporting deflation. what that means for the rest of the world. chart of chinese producer prices. i think it is pretty striking. for years, going back to the beginning of 2012, chinese wholesale prices have been negative. it is sort of a reflection of overcapacity in the industrial manufacturing sector. really in the next few months, coming back in a big way. hotter than expected. the big game is that while the u.s. is doing well, internationally, inflationary wind is still glowing. ofll with us is the head
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allocation at blackrock. talk about -- talk about how this affects the mix. if you look at the data, things are looking fairly good all around the world. >> this tracks how it is coming in relative to expectations, you see a market improvement. the prospect of getting more fiscal stimulus, and a fiscal stimulus at a time when the global economy is stabilizing,, maybe modestly accelerating. all the markets. look at iron ore, look at copper. all of these economically sensitive materials, they have been rally. so focusednk people on the election have missed this ego data story? >> i don't think the move would have been as dramatic except
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that came at a time when there was already a reflection point. no idea stimulus on top of that, maybe they could be inflation, maybe we will move to the upper and of this range which is defined by the global economy of the past five or six years. all of which became this theme. >> i wanted to what extent of the capital controls and china and out of china is coming into u.s. financial assets. to receive money from china have -- helping to prop that up? let's what i think it is propping up is some of these commodities. yes, things are improving but these vertical charge to see want to own dollar-denominated assets. that is part of what is going on. it has been supporting some of these commodities. >> last question, these big markets, where could they go in -- before the turnaround?
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>> i think we could see them back up to 64 to 70, i guess is you probably want see them pull back into the equity market stumbles. we are now at a seasonally strong part of the year. it may run for a bit. great to have you on set. you. a quick programming note. later today on bloomberg technology, we will have a special guest. discuss the impact of the incoming administration's trade policy on technology. that is not a conversation you want to miss. this is bloomberg. ♪
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courtney: the jets to the first word news this afternoon. donald trump has rallied supporters in north carolina head of the state run off election. trump is campaigning for john kennedy in baton rouge, the louisiana and making another stop in grand rapids, michigan. republicans will have a narrow senate majority next year as they maintain the senate seat in louisiana. south korean president was impeached over an infamous scandal. at the national assembly, lawmakers including dozens from her own party, voted overwhelmingly to remove her from office. the first female leader of south
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korea later offered an apology. >> this afternoon, parliament passed an presidential impeachment motion. i deeply apologize to our citizens for causing a big national confusion amid national security and economic concerns. courtney: the results means she is suspended from power with the prime minister assuming internal leadership. the constitutional court must now ratified the decision which could take as long as six months. u.s. military officials seeing an islamic state leader as the french newspaper was killed in syria . he was a mentor to the brothers who gunned down cartoonists at the french paper in 2015. he was released from prison in 2011. the pilot of a hot air balloon that crashed last summer in
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texas, killing himself and 15 others had taken a cocktail of prohibitive drugs before takeoff. painkilleropiate oxycodone and a half to other -- half dozen other drugs in his system. he had been convicted five times for driving while intoxicated. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. thank you so much. let's get a recap of today's market action. we close at record highs. done. joe: another day of record highs thank you so much. basically every subsector except real estate. scarlet: maybe financials do not do as well as they had been doing. every sector was up. more green. the company that wall street old-school traders are calling home. is a small chicago-based firm
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and quickly becoming a refuge for those kicked to the curb as banks turn to technology. joining us for more is hugh son. these are guys who have lost their jobs when wall street was streamlining and cutting the fat, right? gues>> you've heard of this. tradersr gentlemen, that came up in the 1980's and 1990's, some of them are managing directors even though they don't actually manage anybody. they got high promotions. they get paid a lot. after the crisis, these guys were expendable. exchangeexplain -- someone with younger. the business model is collecting all these people and monetizing them. joe: explain more specifically
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what is the business model of this brokerage firm that allows them to really take advantage of what some of these veterans have to offer? hugh: if you are the former wall street sales guy used to making $800,000 a year and you are out, what do you do? you are 55, whatever. you go to a brokerage and monetize your connections. u still have friends at pensions, mutual funds. can you convince them to trade with you? are you so close with them? are you guys best friends? can you get them to trade with you even on the margin? if you can, then you can get a cut of that. the business model for these people is they get up to 75% of commissions, which is -- if you can generate good flow, it is good money. scarlet: what about the cost
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side of the equation? there is a lot of overhead expenses involved with running a firm as well. hugh: they run a lean ship. it is expensive -- they have a bloomberg terminal -- scarlet: that is a worthy investment. -- theowever, these guys main character of the story said the first time he was at pgm, he was in the black. scarlet: goldman's gary was asked to join trump's -- joe: it is official now. was asked to cohen head donald trump economic council. yet another goldman alumnus joining the government. joe: this firm, how big are they? are they expanding still? are there other firms trying to exploit the similar opportunities, who are out of wall street but still have
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skills and connections? size,they have doubled in 160 contractors in the past three years. they have soaked up some of this excess. there are plenty of other firms that do similar things around the country. i would see -- say th phenomena -- most people who try this actually fail. they go to a place like this, they are paying all of their expenses, paying for a lot of their own expenses. if they cannot make it in a few months, they basically fall out of the industry. joe: there is no guarantee for them or minimal or anything like that, but if they can exploit their connections that is an opportunity? hugh: we eat what we kill, that is the phrase they use. scarlet: is there a place they can go to somewhere better or do they want to be here? hugh: that is a tricky question. if they can be at another firm where they have research, bonds, you would do it in a heartbeat. the fact is there are fewer
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feets in wall street now. scarlet: thank you so much. a fantastic story that you can read on bloomberg.com. the latest headline -- goldman sachs' gary cohen, coo of the firm, has been asked to join donald trump economic council. he would be advising the president on economic matters and policy. gary cohen was seen at trump tower. certainly, he had been in discussions with the turmrump team. joe: we will tk more about the breaking news that gary cohn has been asked to head trump's economic council. for more ono d.c. this he cannot -- breaking story. this is bloomberg. ♪
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joe: goldman sachs gary cohn has been asked to head trumps national economic council. he's been more than a quarter-century at the investment bank. joining us now for more on this oury and others is sa correspondent in washington. how does having a goldman sachs executive being the number one person in trump's ear on economic policy fit into the populace drain the swamp message? >> there are two ways to look at it. gary cohn, if he except the position, would be the third -- current or employee in a top position in donald trump's administration. there are twways to look at it. the first is you c arguably say having somebody from this
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elite bank that had a lot of employee in a top position in donald trump's administration. influence in washington a lifetime has not drained the swap. he has gotten criticism from some supporters for calling up too many goldman sachs alums. the other way to look at it is many of his supporters will not care who is around them. they are not necessarily against rich people or elites, but as long as they believe they are not against these people and believe donald trump can make them rich as well. in other words, they will not mind goldman sachs alums as long as they think they can make them rich and prosperous. a year or two down the road, has donald trump delivered? has he improved stagnating wages, median incomes? the things that make people economically insecure and economically anxious to the point that trump broke the blue wall in the upper midwest because of a lot of job issues they have. i think that is the real question. scarlet: do we know how closely gary cohn as chair of economic
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council would work with the treasury secretary, the commerce secretary to accomplish many of donald trump stated platform goals? sahil: it is important advisory goal -- role. donald trump makes bottom line decisions and he will do so as president. if gary cohn is somebody that him, i think he could cap and enormous amount of influence. i think it is hard to know. these president listens to some people more than others at certain times, but it is impossible to know at this point. theoretically, he could be very influential. joe: let's switch to another ongoing story whichthese preside people more than others at certain is everybody is wondering who will be the secretary of state. the headline we had is that rudy giuliani is pulling out of the race to be the secretary of state. is he really pulling out or was he the first scratched off the list? sahil: there have been reports
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that he was essentially scratched off the list, that he was not going to get the job. there are reasons to believe that. giuliani has a lot of baggage. his way of speaking and his demeanor does not scream diplomat to a lot of people. he would have been difficult -- joe: that is the way you are putting it yourself. sahil: indeed. he would have been difficult to confirm through the senate as well. one thing trump does not want and senate republicans do not want is getting mired into confirmation battles early in his presidency. with other people in the running, especially somebody like bob corker, mitt romney who would probably sail through the senate, giuliani was probably not what trump wanted. the campaign put out the statement saying giuliani has to be taken out of the running and they said -- they essentially praised him. if that is the case, they are
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letting him down easy and nicely. scarlet: does that mean rudy giuliani is out of contention for other lesser cabinet posts? have we seen the end of giuliani being at trump tower? sahil: i don't know about -- i don't know if this will be the last of giuliani being able to whisper in trump s ea's ear. it is clear giuliani has taken himself out of the running from any position. joe: there are folks that are boosters -- no chris christie, no giuliani. nothing for newt gingrich yet. mike huckabee went to trump boosterstower but no nominatiom yet. are some of these like people who really put their name behind him getting stiff armed a bit? sahil: that is an interesting point. those three are three of the most prominent original people who did support trump. that certainly notable
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they are not high on the list for administration positions. there are other people that are getting positions like jeff sessions who is -- has been nominated to the attorney general. i think trump i've taken into consideration some pragmatic aspects of who would be problematic to get through the senate, a controversial figure that would distract from other things he wants to do. i think loyalty matters and when it comes to trump picking people, it is not all that matters. joe: there was a fascinating story about how members of trump's cabinet would personally save a fortune, billions of dollars if trump's plan to get rid of the estate tax passes. some of these people are wildly wealthy. how much are some of these folks potentially going to save? sahil: quite a lot of money. trump himself based on our assessment of his net worth
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which is about $3 billion would save half a billion. 18% estateat the tax, much better than 40%. trump would save that much if he is worth how much he says he is. you have someone -- several other billionaires who he has chosen to be in his cabinet including will ross, worth about $2.9 billion. avos, her father-in-law is billionaire and passing that inheritance would save close to $1 billion. you have very wealthy people such as linda mcmahon for the small business administration who was saved a lot of money on an estate tax. one of the notable things here, a line of attack we will see pretty sure democrats pounce on, some of the donald trump's tax policies would benefit
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himself and the people around him and that is potent. scarlet: all right, sahil, thank you so much. ies in the face of his populist campaign rhetoric. joe: we will see how it plays. staying with politics, an interesting week for u.s.-china relations after trump made contact with the taiwanese president and that spurred bigger conversations about which are influencing the administration. scarlet: the taiwanese administration was very quick to put these pictures out. joe: a really fascinating story earlier in the week in which it was assumed the voice of the ceo of are influencing foxconn. saying, i am this big manufacturer, you are donald trump. let me tell you about how manufacturing really works. do you wanted to bring a bunch
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of jobs and to the u.s. to make iphones, this is how you should see how manufacturing works. it is much more complicated. more candiduch voice and telling trump this is what factors into my decision-making process. joe: it sounds great bringing manufacturing back to the u.s., but let's talk about the complications. here is a clip of the conversation. i started by asking him about what donald trump could first learn. >> first of all, i guess he would want to learn exactly how iphones are made and what is involved because the actual assembly on an iphone, putting two pieces together which is the screen and the back, is one step. it is the final step of the process. there is a lot of value to add. what he could really learn is the result more involved in making an iphone. there are many steps before it
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and most of that sits in china. it would be hard to emigrate that to the u.s. joe: as you point out in your piece, foxconn doesn't some manufacturing in brazil -- does some manufacturing in brazil. it does not bring much value to the economy. why is that? >> because they don't actually have that many workers. when i say not that many, it is about 10,000, 20,000. i know president-elect trump would love to send out a tweet saying he is bringing 20,000 jobs to the u.s. to make iphones. the reality is they are not value-added. for somebody like foxconn who has one million workers during peak season, not many jobs. it is getting to parts of an iphone and sliding it together like lego pieces. they don't a lot more in brazil beyond that. that is not the kind of work
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donald trump would want to bring into the united states. i would assume he would want to bring something with more value add and high-level manufacturing. what they are doing in brazil, it does tick all the right boxes and lets apple get around in court terrace and freeze the local politicians who can tell everybody they made some jobs here. it will not do a lot for the economy in brazil. joe: it is very easy to tell a story that you are building something somewhere. you could do all the complicated advanced manufacturing in china and leave one last really simple step, do that somewhere else and say we are making the iphone in brazil or somewhere else. it does not mean much economically. tim: exactly. in my parody letter, i mentioned if he wanted to, he could build iphones in trump tower. he could in theory.
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he could start a production line on one of the floors and build some iphones if you wanted to -- he wanted to. joe: you are in taipei and one of the big events is donald trump having taken a call from the president of taiwan. how is that being seen there and interpreted by the business community and the general public? tim: the taiwanese public in people aroundher the globe are cheering it. the thing is the taiwanese people see themselves as being an independent, sovereign nation. it looks like a duck, > quacks like a duck, it is a duck. it is a liberal democratic country that have free elections for 20 years. there is a feeling in taiwan where we are your kind of people. we are democratic, we have a capitalist free functioning economy.
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you should be giving us a bit more love than you do now. why don't you? we know why not. like every other country in the world, people are beholden to china. it is a large and powerful country. the economy is important to any other country around the world. everybody gets the real politick in china. when he had that conversation, there were cheers. joe: most politicians like to talk about we created manufacturing jobs here. donald trump is not unique in that respect. how do huge global companies like foxconn essentially take advantage of that hunger by politicians to demonstrate a company has made an investment somewhere? what is the tactic? tim: it comes down to a simple show me the money. whenever the government to another country -- indonesia is a good example. there were talks with leadership
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in indonesia a few years ago. they had various lists of wants and needs and demands, including cheap land, tax rebates. any country that wants to lure someone like foxconn there, will really have to listen to what the leader of the company says and wants. in the case of indonesia, they didn't come through with the things foxconn said they wanted and nothing is really proceeding. they will not make iphones in indonesia or anytime soon because they couldn't come to some kind of agreement. impasse. an joe: you can read his column and on bloomberg.y we will be right back. ♪
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scarlet: don't miss this next
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week we have a big set meeting. joe: we will see what the outlook is for next week. scarlet: this might be the one where they raise interest rates this year. joe: that is not the only central-bank decision next week. we have the bank of england, swiss central-bank -- both expected to keep interest rates at hold. scarlet: donald trump plans to meet with texas leaders and hold a press conference on developing his businesses. he will fill in the banks on cabinet and agency offices. just a few minutes from now, an inclusive interview with penny
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courtney: president-elect donald trump is expecting to name congresswoman cathy mcmorris rodgers to have the interior department.
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she is served five terms in the house and vice chair of the transition team. ked transition team has as goldman sachs president gary cohn to have the economic council. bobby valentine is reportedly a candidate to be u.s. ambassador to japan. boomer meagher city mayor rudy giuliani is no longer on the short list for secretary of state. trump is in baton rouge as part of the get out the vote rally for gop candidates. the run-up election in the bayou state is the last in the country for the senate. senate majority leader mitch mcconnell is resisting democrats, moving up a vote for the stopgap spending bill. the major sticking point is benefits for retired miners. state lawmakers want a
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